CPP Splitting on divorce/separation

April 14 2019

Canada Pension Plan Credits – What are they
and how do you split them on divorce/separation?

The Canada Pension Plan (CPP) is a national
scheme which funds retirement pensions, and disability benefits for all working
Canadians over 18. If you are employed or self-employed, over the age of 18,
and making more than $3,500 annually, then you must contribute to the CPP. Once
you reach the age of 70, contribution ends and you will be eligible to receive
CPP payments.

How do I contribute?

If you are employed, then half
of your contributions are deducted from your paycheck each pay period. The
other half of your contributions comes from your employer

If you are self-employed, you
must contribute the entire required amount

The greater your employment
income, the greater your contributions and monthly pension amount when the
contribution period ends

How are contributions calculated?

Contributions are based on your
employment income, up to a maximum contribution amount

The maximum contribution amount
is recalculated by the CRA every year

What if I am retired/taking a leave for
medical or family reasons?

The CPP contribution period is
from ages 18 to 70

Periods where you are not
working for family or child rearing reasons are taken into consideration for
contributions and benefit payments

CPP credit splitting

On separation, you can divide the CPP
contributions you and a spouse or common law partner accumulated while married
or cohabiting. CPP credits are considered to be divisible property in a divorce/separation.

Who is eligible for Credit Splitting?

Parties who separated on or after
January 1, 1987

Parties who have lived together
for 12 consecutive months and have now divorced or who have lived apart for 12
consecutive months

What disqualifies a person from Credit
Splitting?

Persons whose total pensionable
earnings together are not more than double the tax year’s basic exemption are
not eligible for credit splitting.

Persons who were married or
cohabiting before 18 and/or after 70 cannot spilt the credits for those
periods, as no contributions were made at those times.

Parties who were considered
disabled for the purpose of CPP of Quebec Pension Plan (QPP) qualification are
not eligible for splitting

Parties who were a beneficiary
under a retirement pension from the CPP or QPP are not eligible.

How do I apply for Credit Splitting?

Notify Service Canada of your
desire to split credits; or

Request the split with CPP
credit split form (ISP1901)

My former spouse requested credit
splitting, but I don’t agree. What can I do?

Spouses or former partners can
challenge the request of one party for credit splitting

If you receive notice of the
splitting and you would like to challenge, contact Service Canada